The US Senate has postponed the vote on the CLARITY Act once more. Today, the Senate Banking Committee was supposed to decide on the long-awaited crypto market structure legislation. But just hours before the scheduled meeting, Coinbase withdrew its support.
CEO Brian Armstrong called the current bill "worse than the status quo." The postponement marks another setback for US crypto regulation. Industry, regulators, and traditional banks have disputed this for years. Coinbase criticizes several key points of the revised draft. The current text effectively bans tokenized securities. It weakens the Commodity Futures Trading Commission (CFTC) in favor of the Securities and Exchange Commission (SEC). It also expands government surveillance powers in the DeFi space. But the most controversial point concerns stablecoin yields. The banking lobby pushed through a provision that crypto companies can no longer pay interest on stablecoin holdings.
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Months-long dispute over crypto legislation
The CLARITY Act has undergone numerous revisions since May 2025. In July, the bill passed the House of Representatives with 294 to 134 votes. Since then, the Senate has stalled. Senator Tim Scott, chairman of the Banking Committee, published an initial discussion draft in July. In September, a 182-page version of the Responsible Financial Innovation Act followed. Yet all targeted deadlines have failed: first the law was supposed to be passed by June, then by October, finally by the end of 2025.
Democrats accuse Republicans of serving Trump's crypto interests. Maxine Waters, Democratic member of the House Financial Services Committee, stated: "These laws make Congress complicit in Trump's unprecedented crypto fraud." Republicans, in turn, accuse Democrats of deliberately dragging out the process. Scott said multiple resistance has paralyzed the CLARITY Act, but all parties remain in constructive dialogue.
The main conflicts revolve around three areas:
- First, the division of authority between the SEC and CFTC in regulating digital assets. The bill designates the CFTC as the primary regulator for crypto spot trading.
- Second, the regulation of decentralized finance (DeFi). Democrats demanded stricter Know-Your-Customer and Anti-Money-Laundering rules for DeFi protocols in the fall. Industry and Republicans sharply rejected this.
- Third and most fiercely contested: the question of whether stablecoin providers may pay yields.
Banks fight against crypto competition
The banking lobby is waging an aggressive campaign against stablecoin yields. Over 40 banking associations led by the American Bankers Association urged Congress to ban any interest payments on stablecoins. Their reasoning: yield-bearing stablecoins could destabilize the banking system. They could drain deposits that are used for lending. The US Treasury estimated in an April 2025 report that stablecoins could lead to deposit outflows of up to $6.6 trillion.
This argument obscures the real motives. Traditional banks pay their customers well below market rates. According to FDIC data from December 15, 2025, the average interest rate for checking accounts is 0.07 percent. Savings accounts earn 0.39 percent. The benchmark yield for US Treasury bonds was simultaneously 3.89 percent. Coinbase offers around 4 percent annual yield on USDC stablecoin deposits. Other platforms advertise over 5 percent.
The discrepancy exposes the banks' business model. They pay customers minimal interest while they lend out deposits at higher rates. Crypto platforms pass Treasury yields directly to users. The GENIUS Act, signed by President Donald Trump in July 2025, prohibits stablecoin issuers like Circle and Tether from paying interest directly. But the law allows intermediaries like exchanges to pass on yields from the underlying Treasury reserves to users.
This is exactly the "loophole" the banking lobby now wants to close. The revised CLARITY draft from January 14 contains a clause that also excludes exchanges and affiliates from paying yields. Coinbase CEO Brian Armstrong called the banking lobby's argument "mental gymnastics." He pointed to the contradiction of citing security concerns while simultaneously defending a business model that systematically underpays customers.
Industry mobilizes against banking influence
A coalition of over 125 crypto companies and advocacy groups has launched a coordinated offensive against the banking lobby. Members include Coinbase, Gemini, and Kraken. Summer Mersinger, CEO of the Blockchain Association, stated: "What threatens progress is not a lack of political engagement, but the relentless pressure campaign by big banks to rewrite this law to protect their own dominance."
The irony is obvious. Banks that have profited from regulatory protection for decades are now demanding government intervention against competition. They argue with financial stability while effectively defending their profit margins. The net interest margin – the difference between deposit and lending rates – would come under pressure if banks had to compete with stablecoin providers.
Alex Thorn, head of research at Galaxy, also called the Senate CLARITY Act the most significant expansion of government financial surveillance since the USA Patriot Act of 2001. The DeFi provisions could force developers to collect user data and pass it on to authorities. This fundamentally contradicts the philosophy of decentralization.
Uncertain future of crypto regulation
Senator Tim Scott announced that the Banking Committee will resume deliberations at the end of January. The Agriculture Committee was also supposed to deliberate on the CLARITY Act. It postponed its meeting from January 15 to January 27. Both committees need more time for negotiations. Passing the Senate requires 60 votes – meaning bipartisan support. Whether this will materialize is questionable. The fronts between Democrats and Republicans are hardening. Meanwhile, the crypto industry is internally divided. Ripple, Coin Center, and the Digital Chamber support the current draft despite Coinbase's withdrawal. They see the CLARITY Act as a step toward regulatory clarity, even if it's not perfect.
Time is pressing for another reason: the midterm elections are in November 2026. History shows that Congress rarely passes major, controversial laws in election years. The window for complex legislation typically closes in early summer when campaigning begins. After that, lawmakers focus on reelection rather than political compromises. Controversial financial reforms like the original stablecoin bill from 2022 got lost in the election noise.
For the CLARITY Act, this creates urgency. If no agreement is reached by May or June, the law threatens to be shelved until 2027. After the midterms, political majorities could shift. This would have unpredictable consequences for crypto regulation. The US thus risks delaying its catch-up race as a crypto hub.
